Examine Your Government Contract Bid Carefully Before You Submit It

You need to understand what's in the bid package because it is more than a solicitation for a bid; if and when the government signs it, it is also your binding contract. The bid package you receive will most likely come in one of three forms: IFB, RFP, and RFQ. There are a number of standardized forms involved -- be sure that you carefully review the specific form used for your contract.

You're at the point where you are about to take a look at your first bid package. And here is where we let you in on the secret to winning and making a profit on the contract you are bidding on:

Read the bid. Then read it again. And after you think you're finished, read it again.

Why is this so important? In most cases, when you submit your bid, all you have to do is fill in some of the blanks on the forms contained in the package and send the package back to the government. But here's the catch: Even though the government itself generated and provided the package, when you send it back to the government, it becomes your offer, and the government will look at it as if you had put the entire package together yourself and as if they had never seen it before.

Example

A small safety equipment company had been doing government work for the military and doing quite well at it. When the owner died unexpectedly, the owner's widow and son continued running the business. Later, they received a bid package for a stretcher for the Navy, and since this was an item that they supplied, they submitted a bid and won the small dollar purchase order.

When the inspector came out to check the stretchers before shipment, the owners discovered that they had made a very serious error. The requirement in the contract called for more than a stretcher, it also called for the stretcher to be enclosed in a hanging unit for use on the wall of a ship, a requirement that they had missed because they didn't read the bid carefully. And since their bid reflected the cost of the stretcher, not the added cost of the hanging unit, completion of the contract at the price quoted would have broken their company.

We recommended that they try to plead their case to the commander at the buying office and ask to be let out of the contract. Luckily for them, the commander must have been having a good day and canceled the contract: a very rare occurrence for the government.

So, not reading the bid carefully could have cost the owners their business. They were lucky, but you may not be if you fail to carefully review the contract.

You must carefully check out all portions of the contract, not just the description and specification portion. That also means that you can't just gloss over parts that you do not completely understand: You need to take notes as you go so you can address those parts later on.

The package contains all the information you need in order to bid intelligently. All you need to do is read it. Make sure you understand what type of bid solicitation you're looking at, what the government is actually trying to purchase. And, as with any contract you ever sign with anybody for anything, read the fine print. As an old saying goes, "the big print gives, the fine print takes it away."

Types of Bids and Solicitations

Solicitation packages usually range anywhere from 10 to 50 or more pages, depending on dollar value, the Statement of Work and other requirements. They will include clauses and instructions and other information that will tell you the who, what, where and how of the contract.

The first six positions of a solicitation number (e.g., DAA123-00-R-1234) identify the department or agency issuing the document, the next two positions (e.g., 00) are the last two digits of the fiscal year issued, and the single alpha character (e.g., R) identifies the type of solicitation. For example, B = Invitation for Bid, P = Purchase Order, C = Contract, Q = Request for Quote, R = Request for Proposal, etc. The last four positions identify the sequential order for a particular solicitation.

Bids with an alpha of Q or T are for requirements under $100,000. Usually T bids do not have technical data packages included with them, so if you want to bid on them you are looking at reverse engineering a product or trying to go to the original manufacturer and getting the technical data from them . . . lot's of luck!

Note: There is a new character, Z, which is used by at least two agencies for special evaluation and approval. You must first receive approval from and, in most cases, the local DCMO which will visit you and see if you are a "regular" dealer/manufacturer in the goods you are trying to sell to the government. These types of contracts will most likely result in using Electronic Data Interchange as a condition of the contract. So if you see a "Z" bid, be aware that it is a special contract where you will be expected to have your EDI up and running.

There are different forms of bid packages:

Invitation for Bid (IFB): An IFB is an advertised contract, also referred to as a "Sealed bid." There are no discussions, and the bid package is considered complete for bidding purposes. The price is a major consideration, and the signing of the solicitation form, Standard Form 33 (SF 33), by the bidder and by the government creates a binding document. The solicitation number will look something like DAAE20-00-B-1234, with the "B" in the number indicating it is a sealed bid. It is competitive and the low bid will get it. Also, it is probably worth more than $100,000 in value.

Request for Proposal (RFP): An RFP is a negotiated contract. There will be discussions, and the bidder may get the opportunity to change bid pricing, technical requirements, etc. As with the IFB, above, the SF 33 is the form that will be used and, again, becomes a binding contract when both the bidder and the government sign. The solicitation number will look something like N00023-00-R-1234, with the "R" in the number indicating it is a negotiated solicitation. Price and other factors will determine the winner. Here again the value is probably more than $100,000.

Request for Quote (RFQ): An RFQ is a request for information that may include price, but is not a binding contract or document. This is also considered a negotiated bid because the government will want to talk over the information obtained. The number will look something like F62509-00-Q-1234, with the "Q" indicating the solicitation is for information and prices. It is negotiated and may be valued at greater than $100,000. If a contract is made, the government will use a Standard Form 26, Award/Contract.

Become Familiar with Common Government Contracting Forms

There are a number of common contracting forms that you may encounter in bidding on government work. It's worth knowing the purpose and contents of each, since some are specific to certain contract types and/or certain government agencies.

DD Form 1707, Information to Offerors or Quoters, is a form used by the Defense Department along with the SF 33. It is used by bidders to indicate no response to the solicitation and provides the buying office with various pieces of information such as why you are not bidding.

Standard Form 33, Solicitation, Offer and Award, is a solicitation/contract form used by the federal government not only to solicit offers but also to award a contract since it is a bi-lateral (i.e., two-signature) document. This means that the bidder signs the document and submits it to the government and, upon acceptance of the bid, the government signs the same document and a binding contract is established. This form is used for either sealed bids or negotiated contracts valued at $100,000 or more.

Standard Form 26, Award/Contract, is a form used by the federal government to award a contract, usually as the result of a Request for Quotation. Both parties sign, but it requires references to the basic solicitation and/or other documents. In general, the SF 26 and SF 33 ask for similar information to be filled in, but the SF 26 requires some certification information that is not required on the SF 33.

Standard Form 30, Amendment of Solicitation/Modification of Contract, is a form used to do what its title implies: amend a solicitation before it closes or modify a contract that has been awarded. Normally this form is filled out by the government and is then sent to the bidder or contractor for signature.

Standard Form 18, Request for Quotation, is used to obtain information and quotations, but the responses are not considered offers. A SF 26 is sometimes used to award a contract resulting from the use of a SF 18.

Standard Form 1449, Solicitation /Contract/Order for Commercial Items, is used to buy commercial items when the simplified acquisition procedures are used. It can also be used to ship and receive product.

They are in Adobe Portable Document Format (.pdf), and you will need the free Acrobat Reader to view and print the file.

Understand the Language of Standard Form 33, Solicitation, Offer and Award

Let's take a closer look at a typical bid using a common form as an example, Standard Form 33 (SF 33), and we'll show you how to look for what is important.

Tools to Use

Among the Business Tools is Standard Form 33. It is in Adobe Portable Document Format (.pdf), and you will need the free Acrobat Reader to view and print the file.

The SF 33 is divided into four major parts:

Blocks 1-8: The first part contains basic information about the solicitation and is filled in by the government buying office. (Block 2, the contract number, is not filled in by the government until award is made.)

Blocks 9-11: The second part is the Solicitation area. Block 11, Table of Contents, is very important. The sections of Block 11, when taken together, make up the whole solicitation and resulting contract. For example, it contains specific information about the solicitation and also the place where you will enter your bid price.

Blocks 12-18: The third part is the Offer area and is filled in and signed by the bidder before returning the offer to the buying office.

Blocks 19-28: The fourth part is the Award area and is completed and signed by the government when it makes the award.

Warning

We strongly recommend that, when reading a bid, you read it in a particular order. Certain sections are related to each other, and it will be much more efficient and understandable if you read them together.

First, identify which sections of the form apply to the particular bid. We begin our reading of the bid by first taking a careful look at Block 11, Table of Contents. We begin here because the Table of Contents identifies all the applicable sections that will make up the contents of the subsequent contract. For instance, Section B (see below) of Block 11 tells you what is being bought and provides the place where you will put your bid price.

Note that the Table of Contents is divided into the following four parts:

Part I

The Schedule

Part II

Contract Clauses

Part III

List of Documents, Exhibits, and Other Attachments

Part IV

Representations and Instructions

Each Part is further broken out into several sections. Here is a sample Table of Contents for Part I. >Note that all the various sections may or may not apply; a check mark or "x" in the left column will let you know which do.

Section A

Solicitation/Contract Form

Section B

Supplies or Services and Prices/Costs

Section C

Description/Specification/Work Statement

Section E

Inspection and Acceptance

Section F

Deliveries or Performance

Section G

Contract Administration Data

Section H

Special Contract Requirements

Section I

Contract Clauses

Section K

Representations, Certifications and Other Statements of Offerors

Section L

Instructions, Conditions and Notices to Offerors

Section M

Evaluation Factors for Award

Note that the majority of pages consist of the Part I The Schedule, Table of Contents; and Part II Contract Clauses. Part III List of Documents itemizes all the attachments included with the solicitation. Part IV Representations and Instructions contains the solicitation provisions that require completion by the bidder, and the information and instructions to guide bidders in preparing proposals, such as evaluation factors for award.

Read the Fine Print, Twice!

Read and review the following areas to understand every detail.

Find out the government's needs and specs. The first, and most important, sections you should review are Part I Section B (Supplies or Services and Prices/Costs) and Part IV Section L (Instructions, Conditions and Notices to Offerors). These sections are crucial, so read them together carefully and check out the information to see whether this is a product or service that you can provide, and whether you comply with the requirements. Take notes!

Assess the evaluation factors. Next, read Part IV, Section L (Instructions, Conditions and Notices to Offerors) and Section M (Evaluation Factors for Award). (Note that you just read Section L in the preceding step, but you need to read it a second time in conjunction with Section M.) These sections tell you which factors the government is going to use in evaluating the bids and making its decision for award, such as key personnel, technical capability, or financial or transportation resources. Check the factors carefully to see whether your company is deficient in any area. If it is, correct the problem before you send in the bid or do not bid on the solicitation. Remember that you must consider all the factors in the contract, not just some. Again, take notes!

Determine the general and specific requirements of the contract. The next areas to review are Part I, Section C (Description, Specifications and Work Statement), and Part I, Section J (List of Attachments). Section C gives you the general specifications of what the government is looking for. Check the specs carefully; you must be able to comply with all of them. Note that sometimes you may find some inconsistencies between the requirements in Section C and the requirements in Section J. That's because Section J contains the attachments to the bid, which could include changes that affect the work statement in Section C. In general, Section C contains the general requirements for the contract, while Section J contains the specific requirements. It is imperative that you read both sections carefully! Be sure to take notes!

Warning

If you have any questions, you must address them before award of the contract or, if issued under sealed bid procedures, before the bid opening. If you sign the contract in the hopes that the government will accept something else afterward, you are betting on a really dead horse. And, you are playing a game that no longer works even in the commercial sector.

Check out the technical and special requirements.Now read Part II Section I (Contract Clauses); and Part I Section H (Special Contract Requirements), Section D (Packaging and Marking), Section E (Inspection and Acceptance), Section F (Deliveries or Performance) and Section G (Contract Administration Data). These sections provide all the technical requirements on which you will need to perform. Check the packaging requirements in Section D carefully and, if necessary, work with someone knowledgeable in government packaging and marking. Some of the requirements might sound extreme, but remember (especially if the part, product or assembly is for the military) that the item may have to withstand extreme conditions (e.g., battlefield, being dropped out of a plane, hitting a beach at 30 miles per hour, etc.).

In some cases, both the military and civilian offices have recently loosened up on some of their special packaging and packing requirements. Packaging standards in the commercial market are often just as good or better than government standards, so commercial items are now often accepted as they come from the supplier. Also, the government is moving toward an "as needed basis" mentality - in other words, the government no longer stocks items as it did in the past, which permits less stringent packaging requirements.

Read the certification provisions. Currently, you don't have to answer these reps and certs in each solicitation you respond to (see Chapter 7 on Online Representations and Certifications Application). You only need to certify that the data you put into ORCA is current or to indicate any changes necessary for the specific solicitation. However, read Part IV, Section K (Representations, Certifications and Other Statements of Offerors). Here is where you certify that you are a small, minority, or women-owned business; that you have not been debarred by the government; that you are an Equal Employment Opportunity business; and that you agree to certain other policies or programs of the government.

Work Smart

Remember that you must read each and every applicable section of each and every part, word for word, and understand the information contained in each in order to be able to bid intelligently on the solicitation.

Electronic Tracking Rules May Require Use of UID and RFID Technologies

Currently, the use of UID (unique identification) and RFID (radio frequency identification) is just emerging within the government acquisition arena. This information would be included in Section D of the solicitation, if applicable, and possibly Section A, as well. The use of special product IDs dates back to the Vietnam War era, when containerized shipments were not well identified as to content. Moreover, because of the tremendous number of shipments coming in, this method of inventory tracking often made it quicker to reorder, instead of wasting time going through the containers for the supply item. There are many cost-saving reasons to use UID and RFID.

Unique Identification (UID)

UID is something you will hear more and more about. The current rule requires all contractors to uniquely identify, through the use of Item Identification Marketing, all items to be delivered to the federal government. The policy was issued on July 29, 2003 and became effective January 1, 2004. UID has been established to identify tangible items, using all practical international standards and commercial item markings.

It facilitates item tracking in DoD business systems and gives the government reliable and accurate information for management, financial, accountability and asset management purposes. (DoD will be using Commercial ISO/IEC SC31 as its standard along with MIL-STD-130L, go to http://www.acq.osd.mil/dpap/Docs/uid/guide_1_4.pdf; you also can find more information at http://www.uniqueid.org or through your local PTAC.)

The benefits to the government are many: It will integrate item data; improve data quality and global interoperability; facilitate management and accountability of items; enhance asset visibility and lifecycle management through traceable and more accurate audit opinions on the property, plant, and equipment, operating materials and supplies portions of financial statements.

Work Smart

The bottom line for small businesses is: "How does this affect me?" The answer: If you hope to supply the government with an item, you had best get up to speed on these new inventory tracking systems.

What is an item? According to the DoD, "An item is a single hardware article or a unit formed by a grouping of subassemblies, components or constituent parts. In the Department, an item is any article produced, stocked, stored, issued, or used or any product, including system, material, parts, subassemblies, sets, and accessories."

Needless to say, that covers just about everything over $5,000. Use the nearby flow chart to help you determine your needs.

If you think that the government is just doing this to you personally, please remember that the rest of the world is also switching over, and this is the price of doing business with just about anyone nowadays. Also, if you think you will get out of this situation by being a subcontractor, think again. The primes will just flow down the requirements to you.

RFID Tags

Another way to track items involves RFID (radio frequency identification) tags, which use low-level RF signals to transmit stored information from a tag to an electronic reader. The RFID tags are simply microchips that transmit without the use of hand-held scanners, eliminating all manual labor associated with bar codes.

Currently, a few large retailers mandate the use of this technology, including Wal-Mart, Albertson's and Target. In fact, some large businesses have issued a mandate to use RFID right away with its top largest suppliers. These suppliers must apply RFID tags to all cases and pallets sent, eventually expanding to include all receivables within the company.

Basically, RFID technology means that business easily and quickly can track when the goods arrive at a specific location. In fact, when items are placed on conveyer belts, the goods can move at 600 feet per minute and the radio frequency readers will recognize the items as they move by. Not only will the business know when the goods arrive, they will also be able to track the empty boxes so that they know when the goods have been stocked on the shelves. And of course, when goods are sold, they will be tracked again.

As it is now, businesses spend billions of dollars per year on labor to manually scan bar code labels. This cost will be reduced to almost nothing with the use of RFID, which means better prices or more profit.

Other benefits of RFID over bar codes include allowing goods to move more rapidly both at loading docks and point-of-sale stations. Inventory can be tracked without manual stock counts, and there is an expectation of reduced losses from theft because every item can be tracked as it leaves the premises. The retail industry is expected to benefit tremendously from the use of RFID by managing its inventory at every stage of the supply chain.

However, instead of labor costs there will be costs associated with the technology itself. Knowing where each item is at any time provides a tremendous source of information, but unless this information is managed it does not help the enterprise. Thus, companies will need to spend additional financial resources on data management and integration tools.

The immediate short-term impact on the small business is probably negligible. However, in the long run, small businesses also will need to embrace RFID and include tags on all their items; on the flip side, small businesses receiving raw materials from suppliers would benefit by learning how to manage their own inventory issues through RFID. Currently, an RFID tag still costs about 30 cents per item. It is expected that this cost will be reduced to about a penny in the next few years.

Outside of the retail industry, there are other implementations of RFID. For example, some gas stations use RFID in their SpeedPass system, allowing customers to pay for purchases. Meanwhile the Food and Drug Administration is looking at adding RFID to prescription drugs to ensure proper distribution, and to ensure correct dosage based upon prescriptions issued.

Right now, most of the work is currently limited to Fortune 1000 companies, and the reason is primarily due to the high cost of the RFID tags, the readers and the subsequent integration of data with the inventory systems. The cost of implementing and operating this RFID technology is to be considered a normal cost of transportation and logistics.

Premium Services for Business Owners, Managers & Advisors

Business Entity Compliance from CT Corporation — Partner with the Industry Leader

Government contracting requirements are based on commercial specifications and standards. Getting the appropriate type of spec for the contract under consideration is a prerequisite for setting an appropriate price for your offer.